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CBRE Research today released "Japanese Outbound Investment H1 2017", a report summarizing overseas direct investment activity by Japanese investors in existing properties; investment for development purposes; and indirect investment such as through equity investment in funds.

Key highlights:

Outbound real estate investment (direct investment in existing properties) by Japanese investors in H1 2017 (Jan.–Jun.) stood at US$ 1.3 billion, up 23% y-o-y. By region, almost all investment occurred in the Americas, and by asset type, 88% of investments were in office buildings.

Investment for development continues to grow. The total cost of projects announced in H1 2017 was US$ 700 million, up 35% y-o-y. Ongoing development projects announced since 2016 have now reached approximately US$ 1.9 billion. Of these, 95% are projects in Asia Pacific. By sector, mixed-use property accounts for 38%, followed by offices at 30%.

Based on corporate press releases and other information sources, CBRE Research estimates that outbound real estate investment via indirect investment (including through equity investment in funds) could amount to US$ 15.3 billion in the next few years. This is more than the cumulative amount of direct outbound real estate investment in existing properties recorded between 2012 to 2016, which totaled US$ 9.1 billion.

More Japanese real estate and general trading companies are forming real estate funds targeting overseas investment. These funds will serve as investment vehicles for institutional investors and pension funds struggling with low interest rates and are expected to attract a large volume of capital into outbound real estate investment.